I need help, I have some examples the first three pictures the last picture is the my question
F G H J K 3. You are considering a project that will require an initial outlay of $54,200. This project has an expected life of 5 years and will generate free cash flows to the L M company $20,608 at the end of each year over its 5-year life. There will be an additional free cash flow of $ 13,200 at the end of the fifth year associated with the salvage value of the machine. Given a required rate of return of 15%, provide the following: (1) free cash flow chart; (2) PV (Present Value); (3) NPV; (4) PI; (5) IRR; (6) Should the project be accepted or rejected? Explain. (1) Initial Outlay (10) 54200 Cash Inflow 20608 Year 1 Year 2 20608 Year 3 20608 Year 4 20608 Year 5 33808 =22608 + 13200 Rate 0.15 (2) PV = $75,643.95 (3) NPV = $21,443.95 (4) PI = 1.40 (5) Negative IO -54200 Enter IO as negative Cash Inflow 20608 Year 1 Year 2 20608 Year 3 20608 Year 4 20608 Year 5 33808 IRR = 29.59% (6) The project should be accepted because (1) NPV >= 0, (2) PI >= 1.0. and (3) IRR >= Required rate of return1. You are in charge of one division of Bigfella Conglomerate Inc. Your division is considering a new project with the following cash flows: Initial Outlay = $ 100,000; Year 1 = $40,000; Year 2 through 4 = $50,000; Year 5 = $60,000. If the required rate of return is 14%, provide the following: (1) free cash flow chart; (2) PV (Present Value); (3) NPV; (4) PI (Profitability Index); (5) IRR; (6) Should the project be accepted or rejected? Explain. (1) Initial Outlay (10) 100000 Cash Inflow 40000 Year 1 Year 2 50000 Year 3 50000 Year 4 50000 Year 5 60000 Rate 0.14 (2) PV = $168,075.81 =NPV(rate,value 1,value2,value3,value4,value5) (Note: This NPV function actually produces the value of PV, not NPV) Enter each number by moving your mouse to the correponding cell and click (e.g. cell C8 for rate, cell c3 for value 1...) Hit Enter Key when all numbers are entered (3) NPV = $68,075.81 -PV - 10 = 168075.81 - 100000 (4) PI = 1.68 = PV / 10 = 168075.81 / 100000 (5) Negative IO -100000 Enter 10 as negative Cash Inflow 40000 Year 1 Year 2 50000 - 3(3) NPV = $68,075.81 - PV - IO - 168075.81 - 100000 (4) PI = 1.68 - PV / 10 - 168075.81 / 100000 (5) Negative IO 100000 Enter IO as negative Cash Inflow 40000 Year 1 Year 2 50000 Year 3 50000 Year 4 50000 Year 5 60000 IRR = 38.02% -IRR(values,[guess]) Enter all numbers.by dragging your mouse from cell C17 to C22 (No need to enter any value for [guess] Hit Enter Key when all numbers are entered (6) The project should be accepted because (1) NPV >= 0, (2) PI >= 1.0, and (3) IRR >= Required rate of return1. Dowling Sportswear is considering building a new factory to produce aluminum baseball bats. This project would require an initial cash outlay of $5,000,000 and will generate annual free cash inflows as following: Year 1 = $1,000,000, Year 2-4 = $1,500,000, Year 5-7 = 1,200,000, and Year 8 = 500,000. If the firm has 15% required rate of return, provide the following: (1) free cash flow chart; (2) NPV; (3) PV; (4) PI; (5) IRR; (6) Should the project be accepted or rejected? Explain. 2. You are considering a project that will require an initial outlay of $54,200. This project has an expected life of 5 years and will generate free cash flows of $20,608 at the end of each year over its 5-year life. In addition, there will be an additional free cash inflow of $13,200 at the end of the fifth year associated with the salvage value of the machine. Given a required rate of return of 13.5%, provide the following: (1) free cash flow chart; (2) NPV; (3) PV; (4) PI; (5) IRR; (6) Should the project be accepted or rejected? Explain
